1. Purpose
The purpose of this policy is to ensure that CU Boulder complies with sales tax regulations for the state of Colorado, county of Boulder, special districts as appropriate and the city of Boulder.
2. Policy
It is the policy of CU Boulder to charge sales tax as required by the state of Colorado, county of Boulder, special districts as appropriate and the city of Boulder.
3. Determining When to Charge Sales Tax
The following list provides assistance in determining whether or not a sale is subject to sales tax:
- Whenever the university sells tangible property, the sale is subject to sales tax requirements. The definition of tangible property is broad. If the item being sold can be touched, it’s probably tangible and therefore taxable. It is the practice of CU Boulder to assume that the item or product being sold is taxable, unless specifically excluded by statute.
- The university is exempt from paying sales tax on purchases from its own departments such as internal service centers. However, students, faculty and staff not acting in their capacity as agents of the university, private companies and the public must pay sales tax on their purchases from the university.
- Generally speaking, sales transacted using an IN, procurement card (ACARD) or journal entry are tax exempt.
- Sales tax can be waived for a customer only if the customer provides a copy of their current tax exempt certificates, both for the state of Colorado and the city of Boulder. To reiterate, the burden of proof for the exemption is on the person asserting the claim of exemption. Exemption certificate copies must be kept on file by the department making the sale. This is essential in the event the operation is audited by the Colorado Department of Revenue, and it becomes necessary to justify why tax was not collected and remitted on the respective sale.
Sales of services are not taxable. If a sale involves both goods and services - such as a repair operation that involves charges for both parts and labor - the parts (tangible property) are taxable but the labor (service) is not. The seller should list and identify the parts portion of the sale separately from the labor/service portion of the sale. Failure to do this can render the entire amount of the sale subject to sales tax.
4. Determining How Much Sales Tax to Charge
The amount of sales tax charged depends upon the following factors:
- The type of product being sold and
- The tax rate in effect at the time of the sale and
- Where the sale took place, i.e., where the customer took possession of the product
4.1. Product & Tax Rate
Exhibit 1 lists items frequently sold on campus and identifies which sales tax rate to apply.
Note: This is not an all-inclusive list of items to be taxed. It is a representative sample. Contact your campus accountant if you have any questions about whether or not a sale is taxable.
4.2. Date of Sale & Tax Rate
See current sales tax rates. Sales tax rates are subject to change during both January and July of each year.
4.3. Location of Sale & Tax Rate
The sales tax rate charged depends upon where the customer takes possession of the goods. For additional information, refer to the state of Colorado website.
5. Items for Special Consideration
5.1. Food Sales
5.1.1. Non-Taxable Food Sales
Certain types of food sales are not taxable. These include:
- Sales of food items from vending machines.
- Meals provided to residence hall boarders as part of a room and board package of at least 30 days duration.
5.1.2. Caution Regarding Vending Machine Food Sales
Certain products, although commonly perceived as a food or beverage, are not considered to be food or beverage items when sold in a vending machine. These products, therefore, are taxable. Examples include:
Note: Contact your campus accountant if you have any questions about whether or not a vending machine food sale is taxable.
6. Operational Aspects of Sales Tax
6.1. Displaying the Sales Tax License
CU Boulder has its own state of Colorado sales tax license and city of Boulder sales tax license. Operations that charge sales tax are required to post a current copy of each license in a conspicuous place.
Copies of these licenses are available from CCO:
6.2. Charging Sales Tax
Sales tax may be charged as a separate line item at the time of the sale. This is the preferred practice at CU Boulder. In a limited number of circumstances, it may be permissible to impute sales tax after the fact. Work with your campus accountant to determine the most appropriate method for your operation.
6.3. Recording Sales Tax
6.3.1. Charging Tax at the Time of the Sale
As stated in Section 6.2 of this policy, charging sales tax as a separate item at the time of the sale is the preferred practice at CU Boulder.
When the cash receipt is prepared to record the day’s financial activity, the sales tax liability is listed on a line separate from the revenue.
Note: A copy of each cash receipt on which sales tax liability is recorded should be sent to:
Sales Tax – Campus Controller’s Office
579 UCB.
This is for audit support. If this material is not sent to CCO, the department will be responsible for producing the necessary documentation in the event of an audit.
6.3.2. Imputing Sales Tax
A limited number of CU Boulder departments impute sales tax rather than book it directly. In this situation, all sales are booked initially into revenue. At a later date, a journal entry is prepared which moves the appropriate amount of sales tax from a revenue account to the tax liability account. This method is not recommended except in a few special situations. Work with your campus accountant to determine if this method is appropriate for your particular needs.
Exhibit 3, which follows, provides an illustration of imputing sales tax.
7. Departments That Remit Their Own Sales Tax
It is imperative that departments who hold their own sales tax license and/or remit their own sales tax payments stay informed about current tax rates, filing frequency, filing/ payment deadlines and changes in tax regulations. Resources for such departments include: